NYSBA Paris Brexit - Legal and Constitutional Ramifications

Transcription

1 NYSBA Paris Brexit - Legal and Constitutional Ramifications Michael Dean Partner Maclay Murray & Spens LLP Scotland and London Michael.dean@mms.co.uk

2 Why the referendum? Conservative Prime Minister s party worried about rise of UK Independence Party Wanted to stop right wing/eurosceptic wing of party banging on about Europe Concerns about number of workers from Eastern Europe working in the UK (immigration); sovereignty of Parliament; contributions to EU budget; regulations from Brussels Cameron negotiated limited package to limit entitlements to certain in-work benefits, to enhance domestic parliaments influence to block EU legislation, to opt out of ever closer Union ; to avoid non-euro zone countries bailing out Euro; to cut burden of regulation. Campaign kicked off 15 th April with voting 23 rd June 2016

3 Campaign to 23 June 2016 Remain Predicted economic collapse, pound plummeting, loss of jobs, frozen out of trade deals labelled Project Fear Leave UK would prosper after initial period Get rid of Brussels-imposed regulation Stop uncontrolled migration from EU Regain control by UK Parliament of our laws/ our borders Stop paying to EU budget - 350m a week for National Health Service Trade with EU and Rest of World/single market? We can always trade with single market! Stop interference by unelected judges in Luxembourg Options EEA/EFTA lots of discussion about options outside EU

4 A Low Point in Anyone s book Leave campaign poster which was regarded as playing to base and blatant racism, as well as being totally misleading. If the arguments were so good why resort to the poster in this next slide!

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8 Aftermath Prime Minister Cameron resigned Promises of 350m for NHS denied New PM, new Ministers: Brexit means.brexit! Hard or Soft? Single market or not? UK Government no preparation for result grossly negligent - Foreign Affairs Committee No plan, no capability Article 50 mechanism for a Member State to exit the EU notice to be given by the Member State to the European Council March 2017

9 Where are we now? To Withdraw from EU State must give notice under Article 50 Lisbon Treaty Article 50 : Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements Negotiation for withdrawal/framework for future relationship Qualified majority of 27 States; consent of European Parliament Treaties cease to apply from either a withdrawal agreement coming into force or 2 years from notice served, unless extended by unanimity of 27 States - Art 53 Not conditional Not reversible

10 UK Constitutional Issues Referendum was not mandatory, has no legal force Govt says Notice may be given end March 2017, conclude agreement and exit 2019 (general Election 2020) Who can give Notice? Executive but without Parliament approval? Government claims it has executive power; Crown privilege to enter into/withdraw from Treaties HL Select Committee on Constitution says Parliamentary authority required Judicial review challenge under way in English High Court; also in Northern Ireland High Court? Role of devolved Parliaments/nations - UK Parliament will not normally legislate in areas devolved to Scottish Parliament Many powers repatriated are devolved -

11 Grounds of challenge English High Court: Serving Article 50 Notice inevitably ultimately changes rights which individuals enjoy under EU law/treaties Treaties/EU law given effect to by Act of Parliament -European Communities Act 1972 A Minister has no right to start a process which, irrespective of Parliament, will remove individuals rights Serving Notice renders 1972 Act of Parliament redundant Northern Ireland High Court: Arguing Northern Ireland Assembly and people consent required due to impact on Peace process and Good Friday Agreement which underpins process UK Government does not want Parliament to vote, as concerned that most MPs do not believe Brexit is good for the UK their oath includes public interest a negative vote could lead to further political turmoil

12 Political Problem - Scotland 2014 Independence Referendum One major argument - vote for independence would mean exiting the EU with no certainty of admission; vote against independence if want to remain in EU 55% no to independence But 56 of 59 Members of UK Parliament are now pro-independence party EU referendum 62% voted to Remain; every district voted to remain Scotland to be dragged out of the EU Scotland s First Minister is seeking second Independence Referendum if not in single market Choice- UK inside single market/possibly end of UK but outside EU

13 Repeal Act ( So called Great Repeal Act! plain puffery) What is to happen to body of European law? Adopt EU law into UK law and gradually amend, disapply or retain Not suitable where reciprocity e.g. jurisdiction, recognition of judgments Remove the jurisdiction of the European Court of Justice Questions re existing legal principles of EU law, transition, previous judgments on issues where EU law principles relevant UK positions/policies required to replace EU laws, policy making, policies: Environment, antitrust, state subsidies, regional policy, energy policy

14 Challenges? Impact on Competition Commercial Contracts Data Protection IP Employment Law Tax International Influence, Holding Company Regime, Corporate, Brexit Effect Dispute Resolution Financial Services

15 Competition Law? Currently large mergers reviewed by European Commission one stop shop UK needs capability to review such mergers Competition criteria whereas UK Government now seeking public interest test (political influence) UK Government has discovered concept of industrial strategy European Commission investigates cartels across Europe; UK will have to gear up to also investigate those affecting UK Law on distribution/supply chain restraints based principally on EU law single market principles will any of that change in the UK? Section 60 of Competition Act UK competition authority and courts must interpret UK competition law in line with CJEU/EU law principles State aid - No UK law controls state subsidy

16 Impact on Commercial Contracts Impact of EU law on Commercial Contracts Potential divergence of laws over time So what should parties be considering? Unintended consequences Anticipate and provide for change

17 Challenges? Commercial Contracts Commercial Terms Modification (EU trade agreements tariffs/barriers, customs duties, exchange rate, etc.) Termination Force Majeure Impossible and Economically Unattractive (useless) Governing Law Clauses Rome I Regulation

18 Data Protection Current position EU Data Protection Directive/ Data Protection Act 1998 Strict rules govern the transfer of personal data from the EEA to third countries Post-Brexit issues GDPR will apply at least until Brexit takes effect Will the UK be deemed a safe third country?

19 IP: Post-Brexit Issues Effect on existing EU-wide IP rights? Exhaustion of rights The Unitary Patent/ Unified Patent Court Future divergence of IP laws?

20 Impact on Employment Laws UK origin Unfair dismissal Family leave and pay National minimum wage Trade union legislation Proposal to require companies to publish numbers of foreign staff? Manifestation of small minded xenophobes in current government EU origin Discrimination Law TUPE Holidays \ Working Time Collective Redundancy Agency Workers Free movement

21 Impact on Employment Laws cont d What practical steps can be taken now? 1. Consider workforce profile against impact of any free movement of workers change 2. Review whether contracts / policies / Handbooks allow sufficient flexibility for future change 3. Prepare for key changes ahead (including EU based such as General Data Protection Regulation)

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23 Passports Financial services Passports allow cross-border investment-related business and establishment of branches in EEA states No passports following Brexit Potential third country regime: May allow non-eea firms to provide investment services to professional clients by registering with ESMA ESMA must make equivalence determination Inherent delays with determination, timing uncertain

24 International Influences on UK Tax Laws EU impact Introduction of new taxes e.g. VAT EU directives Compliance with the four fundamental freedoms of Treat band nondiscrimination Other international influences Tax treaties OECD and BEPS

25 Corporate Taxes Treaties Parent Subsidiary Directive eliminates withholding taxes on dividends paid within an EU corporate group Royalties and Interest Directive eliminates withholding taxes on interest and royalty payments within an EU corporate group EU Merger Directive - Company migration

26 Brexit Effect Tax inefficiency within existing corporate structures Tax inefficiency within existing commercial arrangements Tax liabilities on any restructuring necessary to deal with the consequences of Brexit

27 Dispute Resolution Challenges? Brussels 1 Recast Regulation and Lugano Convention 2007 (jurisdiction and enforcement of judgments) may cease to have effect in UK Brussels Convention may apply and be extendable to other Member States joining EU after B1R Bilateral Treaty would be ideal allowing UK to participate in B1R Role of CJEU in interpreting may be political issue English law will be expected to remain the popular choice for commercial agreements and English courts for enforcement both for EU transactions and agreements and non-eu parties- gradual diminution of UK legal systems Grounds of administrative law challenge may diminish

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29 Thank you for your attention! Michael Dean Partner, Head EU, Competition & Regulatory Maclay Murray & Spens LLP London, Edinburgh, Glasgow, Aberdeen